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2020 | Book

A Brief Review: Socio-Economic Changes Read chapter Read first chapter

Digital Finance, Bits and Bytes

The Road Ahead

Author: Vasant Chintaman Joshi

Publisher: Springer Nature Singapore

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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About this book

The book encompasses the broad field of e-Finance and its transformation. After reviewing the developments in the economic and the technology fields, it examines how the insurance, banking, and securities trading firms are bringing about the digital revolution and adapting in the same breath to the changed socio-economic environment. Add to it, the “Rogue Elements”, the field of cyber crimes is covered on a priority basis.

The book also covers the inevitable changes in fields of HR and Marketing and the crucial role of the regulators. Looked at through the eyes of Corporate Planner, the book does provide a road map for the financial institutions (FIs).

Table of Contents

Frontmatter
Chapter 1. A Brief Review: Socio-Economic Changes
Abstract
Barely did the FSIs stabilize after the banking crisis of 2008–2010, when they had to face major socio-economic upheavals. The USA suddenly reversed gears and advocated “America First” policies. They reversed compacts on trade (NAFTA, Climate Treaty etc.). They even dismantled the environmental and financial services regulatory mechanisms.
The FSI has yet to fully grasp and satisfactorily deal with these changes. One could say that the situation is in a great flux.
Europe is equally faced with similar situation. UK’s decision to stay or quit EU still hangs in balance (Brexit) and the position of London in the emerging scenario. Thus, there is nothing but uncertainty facing decision makers.
Vasant Chintaman Joshi
Chapter 2. Technology Challenges: Impact Assessment
Abstract
Technology “Disruption” is the main fallout from developments on the technology front. Big Data Analysis, Artificial Intelligence and Machine Learning, and Augmented and Virtual Reality are increasingly being used and are affecting the working of FIs as never before. Cut throat competition from Google, Apple, Facebook, and Amazon as well as midsized tech savvy companies has impacted the profits and have drawn away the customers from the mainstream FIs. Customer attitude toward and expectations from are significantly different and have to be met as soon as possible. Sadly, the customers have lost trust in the FIs. It is not mere technology that they have to worry about but even “cultural” aspects of working.
Vasant Chintaman Joshi
Chapter 3. The Internet: Engine for Change
Abstract
The Internet facilitates 24 × 7 use of banking services by the customers. Gradually, the importance for branches as distribution and record keeping centers is waning. Hand holding support by brokers and agents could also be easily dispensed with. Closure of branches and gradual disappearance of middle men was a natural corollary. Openness and access to accounts in different organizations did follow.
Equally serious however is the increase in the number of cyber-crimes and interference by national and state level actors in matters political and social.
Society at large will have re-double its efforts to prevent the misuse of these facilities. Regulation would have to come in.
Vasant Chintaman Joshi
Chapter 4. E-Insurance
Abstract
The insurance industry presents a mixed picture on its responses to the emerging changes. Some companies have successfully taken over/collaborated with InsuTech units and have tried to come out with varied products and to meet the requirements of the shared economy, and in some cases are coming out with new business models. Micro Insurance also is now gradually getting to the front burner.
On the other hand, some companies (majority perhaps) are still dependent on their legacy systems and seem to be reluctant to embrace the new technologies. One has to wait and see how the future unfolds.
Vasant Chintaman Joshi
Chapter 5. E-Banking
Abstract
Banks were badly affected by the technology disruption and the impact was seen on their profit and loss accounts. Some of the banks did take over the FinTech companies but the others were too big and had deep pockets. They could easily compete with the banks and are now a major threat. These (GAFA) companies are pioneers in the use of technology devices. Banks have to cope-up with serious problems relating to HR and marketing, and even on the technology fronts. The journey ahead is strewn with difficulties.
Vasant Chintaman Joshi
Chapter 6. E-Trading
Abstract
Securities trading is increasingly getting corporatized and relies on highly sophisticated technology for its operations. High Frequency Trading is becoming the order of the day and major companies resort to dark pools.
The regulatory apparatus is not able to cope with the emerging problems (even paper explosion) and there is a considerable loosening of micro management practices through regulations. Newer developments have to be awaited in this field.
Vasant Chintaman Joshi
Chapter 7. Cyber-Crimes and -Laws
Abstract
The number one risk identified by CEOs/senior executives is the menace of cyber-attacks. The danger is not about identifying where and when but how big the loss would be. Legal mechanisms are not sufficient as deterrents. Bringing to book the perpetrators through IT acts is becoming difficult. However, the regulators and companies are collaborating nationally and internationally to curb the menace. Perhaps, one will have to live with it and attempt to minimize the number of incidents as much as possible. A civil society can go thus far and no further.
Vasant Chintaman Joshi
Chapter 8. General Risk Management
Abstract
FIs are improving on their various risk models and increasingly are better equipped to anticipate and pro-actively handle them. Reputational risk is one constant worry and more particularly because of danger lurking in the air by the acts of cyber-thieves. Building up enough resilience and use of protective devices is the only remedy.
Vasant Chintaman Joshi
Chapter 9. Cyber-Risk Management
Abstract
Having legal remedies facilitates bringing in the state machinery for dealing with such crimes. The various acts do work to some extent in preventing the nefarious acts. The race to develop security measures and being ahead of the perpetrators is one kind of challenge the FIs have to meet. On the other hand, through periodic tests, being vigilant about employee discontent and learning from experience of others are the steps that FIs can take to build up their resilience.
Regulatory like Bank of England along with other authorities have come to the rescue of institutions and conduct periodic checks to ensure that to some extent the dangers are warded off.
Like in all such matters, the top management has to throw its’ weight fully behind such measures.
Vasant Chintaman Joshi
Chapter 10. Human Resource Management
Abstract
On the one hand, HR will have to give up its out dated practices for calling for applications, interviews etc. They have per force to shift their entire focus on using of technology to facilitate the routine functions.
At another level, they have to meet the aspirations of the new entrants not merely in terms of salary but also in areas like work life balance and their aggressive career expectations. HR will also have to encourage group working and through it facilitate quicker promotions. The old hire to retire policy will have to go out of the window.
Far more serious is the problem of termination of services of low skilled employees. How to continue some of their “benefits” is going to be the major problems. The problem could be acute in case of middle-aged staff.
HR functionaries are going to be stretched to the hilt.
Vasant Chintaman Joshi
Chapter 11. E-Marketing
Abstract
Digitized marketing affords an opportunity both for personalization of products and also bringing in financial management skills to bear on such decision making by individuals. A stitch in time (i.e. an advisory from the bank or FI) would save a customer from rash and wanton expenditure. The banker’s warning is likely to be heeded.
At the same time, the banker could advice you about ways to prepare for emerging future needs.
In this endeavor, technology will play a very important role. Data analysis, mobile applications, email messages, and video presentations could assist a customer in refining his financial management skills. Technology will play a significant role in the future marketing efforts. Customers should realize that they have to be active participants in the process, men and machines have to act in-sync.
Vasant Chintaman Joshi
Chapter 12. Regulating Banks and Insurance Companies
Abstract
Regulatory policies are at cross roads. In the USA, regulatory and supervisory apparatus is being dismantled. On the other hand, the authorities in the UK are thinking of strict supervision and even ring fencing of institutions if required.
A noteworthy development is of focus on customer behavior and a critical evaluation of various schemes and products through their impact on the customers is being brought into play. Behavioral sciences are playing an important role in this development. The establishment of the financial conduct authority and their articulation of behavioral aspect under study are steps in the right direction. Even countries like Australia are trying out these methods and one hopes that customers in the long run would stand to benefit and would be saved from nefarious activities of rogue traders coming up in the market.
Vasant Chintaman Joshi
Chapter 13. The Road Ahead: Alternative Model Digitization and Required Developments
Abstract
The chapter gives a very broad road map for transition to a complex and difficult changeover.
In the first place an easier solution would be to set up a branch for high net-worth individuals and start the operations there when the changeover is being undertaken. This would be a sure way not to disturb/discontinue the operations in legacy system working. In fact it would be an experimental hub.
In case this is not possible then there is no option but to take up the challenge and have the required development work at the shop floor level. This practice is now followed by many organizations going in for major changeover. This affords opportunities to staff members working there to air their problems, and also ensures that the developers know exactly what the staff requires.
Of course one needs to give proper briefing to the staff and a proper supervised environment to ensure that unnecessary problems are not created. It requires a magician’s skills in keeping a number of colored balls in the air at the same time.
Vasant Chintaman Joshi
Backmatter
Metadata
Title
Digital Finance, Bits and Bytes
Author
Vasant Chintaman Joshi
Copyright Year
2020
Publisher
Springer Nature Singapore
Electronic ISBN
978-981-15-3431-7
Print ISBN
978-981-15-3430-0
DOI
https://doi.org/10.1007/978-981-15-3431-7